IR in India – Pre Independence
• In the pre-independence days the workers were hired and fired as the
principle of demand and supply governed industrial relations. The employer
was in a commanding position and the conditions of employment and
wages were very poor which led to revolutionary movements. There were
hardly any laws to protect the interests of the workers except the
Employers and Workmen (Disputes) Act, 1860, which was used to settle
wage disputes.
• After the 1st world war, IR assumed a new dimension in the sense that the
workers resorted to violence and employers to lockouts. There were
numerous strikes and disturbances during 1928-29. As a result the
government enacted the Trade Disputes Act, 1929, to enhance the early
settlement of industrial disputes. However the Central or the State
governments did not make adequate use of this law leading to acute
industrial unrest.
• In 1938, the Bombay government enacted the Bombay Industrial Relations
(BIR) Act. For the first time a permanent machinery, called the Industrial
Court, was established for settling disputes. This Act was amended a
number of times.
• After the 2nd World War, India faced many problems like the rising cost of
living, scarcity of essential commodities, high population growth and
massive unemployment leading to turbulent industrial relations.
IR in India – Post Independence
• Industrial relations in India during the post-independence era
underwent a significant change. One of the most significant
development in the field of Industrial Relations was the enactment
of the Industrial Disputes Act, 1947, which not only provides for the
establishment of permanent machinery for the settlement of
Industrial Disputes but also makes these awards binding and legally
enforceable.
• The Constitution of India provided for Freedom of Association to all
citizens subject to the interests of public order. This gave the
workers right to association, organisation and collective bargaining
and a fillip to the trade unions to rise, seek affiliation with Central
bodies and to function more effectively.
• An important development was the setting of the Indian Labour
Conference (ILC), a tripartite body to look into IR problems in India.
Its main objective was to establish cooperation between the
government, the employers and the trade unions
• In 1966, the National Commission of Labour (NCL) was appointed
by the government to look into labour matters and make
recommendations. According to NCL, industrial relations affect not
merely the interests of the two participants- labor and
management, but also the economic and social goals to which the
State addresses itself.
• During this period there was a marked change in the attitude of
the government towards labour and their problems and many
labour laws were enacted between 1947-1956 to protect the
interests of the industrial workers covering issues like seniority,
wage rates, paid holidays, disciplinary matters, social security etc.
The Government enacted The Indian Factories Act, 1948,
Employees State Insurance Act, 1948 and Minimum Wages Act,
1948 - all measures for the welfare of the workers and industry.
During the late 1970s and early 1980s industrial relations was
characterized by violence due to various reasons like rising price
levels @ 15%-20% annually, ineffective machinery for speedy
resolution of industrial disputes, and other problems like controls
on production, licensing procedures, high rate of taxation,
restrictions on imports etc. which inhibited industrial growth
leading to incapacity to meet the legitimate demands of the
working class.
To meet the situation of industrial strife, the government, on
26th July, 1981, issued an ordinance to ban strikes. A new law
Essential Service Maintenance Act (ESMA) was promulgated.
This Act provided the government with wide ranging powers to
intervene in industrial relations. It empowered the government to
ban strikes, lay-offs and lockouts in ‘essential services’ and also
punish any person who participates or instigates a strike deemed
illegal under ESMA.
Industrial Relations - Five Year Plans
The Five Year Plans focused on:
– Improving the conditions of labour and welfare of
workers
– Prevention and settlement of industrial disputes and
maintenance of industrial peace and harmony to
avoid disruption of industrial activity which could
adversely affect the realization of plan goals
– Controlling industrial growth to prevent concentration
of economic power in the hands of a few and reducing
income disparities among individuals and regions
– Worker’s education
– Worker’s participation in management
The scenario of the Indian industrial relations has been fast changing.
With the incoming of a liberal leader at the Centre and the reforms
following after that have played a key role in giving a new definition to
the scenario. The tradition started by the Japanese concerns and some
of the Indian pioneers is being carried forward by the industry.
The late 80s and early 90s saw an unprecedented movement in the
positive direction. The overall strikes and subsequent man-days lost
are on decline. The progressive outlook is on an increase.
The major events that occurred are:
1. Liberalisation and Globalisation
2. Entry of MNCs
3. Paradigm Shift
IR in India – At present
• Prior to 1991, the industrial relations system in India sought to control
conflicts and disputes through excessive labor legislations. These labor laws
were protective in nature and covered a wide range of aspects of workplace
industrial relations like laws on health and safety of labors, layoffs and
retrenchment policies, industrial disputes and the like. The basic purpose of
these laws was to protect labors.
• However, these protectionist policies created an atmosphere that led to
increased inefficiency in firms, over employment and inability to introduce
efficacy. With the coming of globalization, the 40 year old policy of
protectionism proved inadequate for Indian industry to remain competitive
as the lack of flexibility posed a serious threat to manufacturers because
they had to compete in the international market.
With the advent of liberalization in1992, the industrial relations policy
began to change. Now, the policy was tilted towards employers. Employers
opted for workforce reduction, introduced policies of voluntary retirement
schemes and flexibility in workplace also increased.
Globalization brought major changes in industrial relations
policy in India. The changes can be summarized as follows:
•Collective bargaining has become more decentralized in most of the sectors.
•The number of local and enterprise level unions has increased and there is a
significant reduction in the influence of the unions.
•Another trend is that the employers have started to push for internal unions
i.e. no outside affiliation.
•Some industries are cutting employment to a significant extent to cope with
the domestic and foreign competition e.g. pharmaceuticals. On the other
hand, in other industries where the demand for employment is increasing are
experiencing employment growths.
•In the expansionary economy there is a clear shortage of managers and
skilled labor.
•HR policies and forms of work are emerging that include, especially in multinational companies, multi-skills, variable compensation, job rotation etc.
These new policies are difficult to implement in place of old practices as the
institutional set up still needs to be changed.
•HRM is seen as a key component of business strategy.
•Training and skill development is also receiving attention in a number of
industries, specially banking and information technology.
Some major changes in the economy that have influenced the
dynamics of the labour-management relations
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Before Liberalization
State sponsored & state mediated
development
Protected domestic market
Budgetary and directed institutional
resource allocation
Subsidies and administered price
regime
Welfare state active in labour market
Systematic de-casualisation of jobs
Largely government-funded social
security and welfare programmes for
a few
Stable government structure and
policy regime
Stable, though obsolete, labourintensive technologies
Dominant status of manufacturing
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After Liberalization
Market led and private enterprise
dominated
Competitive market
Competitive capital market-led
resource allocation
Rational pricing, including user
charges
Labour neutral and investmentfriendly state policies
Fast re-casualisation and
contractualization of jobs
Crisis of sustainability of social
security welfare and pressure for
security measures for all.
Crisis of governance and fear of
political & economic instability
Micro-electronics led new generation
capital and skill intensive
technologies.
Threat of deindustrialization and rapid
growth of the service sector.
Future of Industrial relations in India
• There are many labour laws in the country, covering all
aspects of labour, to protect industrial workers. The
problem is not lack of labour laws but that of lapse of
implementation owing to lack of fuller understanding
on the part of management. Moreover in the absence
of an all India code, labour laws have a tendency to
overlap and become repetitive.
• A common labour code will help in reducing the gap
that are occurring as a result of the variations that
occur in central and State legislations as far as labour
matters are concerned.
• Various Worker-Participation schemes in management
has not made much progress.
Several attempts have been made by the government,
through its five year plans, to implement the various
labour laws. The National Commission on
Labour (NCL) has also made recommendations for the
better implementation of labour laws.
Moreover the whole system, inclusive of management,
workers and legislations, need to take into account the
effect of their actions on the consumers and society in
general, owing to the growing inter-linkages between the
Industry and its environment. The environment is fast
Changing and the pressures from various groups involved
are starting to get more vocal and intense. The strategy
chosen for attainment of goals will not only depend on the
objectives, values, structures and environment but also
on the personnel and industrial relation functions.
Industrial relations in India
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Industrial Relations: Organized sector and their impact on unorganized sector- There was a
rapid transformation from the agrarian system to an industrial one. But of the total
population only 37% are in the workforce of which only about 25.5 % are in the organized
sector. But the patterns of Industrial Relations has a definite impact on labour-management
relations in the unorganized sector. The trends and patterns established in the organized
sectors spills over as there is always pressure on unorganized organizations to match its
employment, working conditions, benefits etc with that of organized sector.
Unions are important force in the Indian political scenario- Unions are sometimes a fall out
of the political system and is used for electioneering purpose. Also unions sponsored by
ruling parties has an influence on the legislative process through their intense lobbying.
Strong national level unions are consulted by government in formulating various socioeconomic policies which in turn influences the system of industrial relations.
Varying patterns of Industrial Relations in India – The IR patterns vary not only in
unorganized and organized sector but also within the latter. Due to non unionization in the
unorganized sectors the grievances are at times redressed by threats of dismissal or other
violent forms, thus the problem of Industrial Relations is not allowed to surface.
Changing dynamics of Industrial Relations in India – Initially with the adoption of socialistic
pattern of society and subsequent acceptance of Industrial policy, the public sector was
entrusted with the responsibility of accelerating economic development and growth in the
country. There were many constraint in the growth and development of the private sector.
The industrial relations scenario was poor in the private sectors and the employees had to
suffer in the hands of the employers. The employees of public sector got a better deal. With
the liberalization of the Indian Economy, the labour-management relations are now
improving in the private sectors and getting strained in the public sector.
ORGANISATIONS
ILO – The international Labour Organisation
ILO was established on April19, 1919 by Versailles Peace Conference as an
autonomous body associated with the League of Nations. It deals with
international labour problems.
It is a tripartite body consisting of representations of
i) employers (who share responsibility for the welfare of the workers),
ii)labour ( for whose benefit it is created)and
iii) government (which finance it).
In the ration 1:1:2.
The principal organs of the ILO are
i) The International Labour Conference
ii) The Governing Body
iii) The International Labour Office.
ILO has been attempting to promote world wide respect for freedom and
dignity of the working man and to create conditions in which that freedom
and dignity can be more fully and effectively enjoyed.
India became member of ILO in 1919, as an original signatory to the treaty of
peace.
National Level Federations
• The Indian Trade Union Movement had initially witnessed the
presence of four major federations. They are
1. All India Trade Union Congress (AITUC) – established in 1921,
the Communist thinking had greater influence in the formation
and the working of the AITUC and it espoused a more radical
approach, To protest the Communist supremacy , the moderates
withdrew from AITUC and formed another Federation.
2. Indian National Trade Union Congress (INTUC) - This union was
organised in 1947 with active support and encouragement from
Congress leaders. It wanted to bring about a peaceful and nonviolent solution to industrial disputes.
3. Hind Mazdoor Sabha (HMS) (UTUC) - This national federation
came into being in 1948. This federation espouses the socialist
philosophy and has linkages with socialist parties.
4. Centre of Indian Trade Unions (CITU) - is a National level Trade
Union in India politically attached to the Communist Party of
India (Marxist). This is a national federation which was
established in 1971 as a result of the split in the AITUC. CITU is
today one of biggest assembly of workers of India.
At present there are twelve Central Trade Union
Organizations in India:
1. All India Trade Union Congress (AITUC)
2. Bharatiya Mazdoor Sangh (BMS)
3. Centre of Indian Trade Unions (CITU)
4. Hind Mazdoor Kisan Panchayat (HMKP)
5. Hind Mazdoor Sabha (HMS)
6. Indian Federation of Free Trade Unions (IFFTU)
7. Indian National Trade Union Congress (INTUC)
8. National Front of Indian Trade Unions (NFITU)
9. National Labor Organization (NLO)
10. Trade Unions Co-ordination Centre (TUCC)
11. United Trade Union Congress (UTUC) and
12. United Trade Union Congress - Lenin Sarani (UTUC - LS)
Federations of Trade Unions
• Some of the registered federations of unions in
various industries and occupations.
1. All-India Bank Employees Association
2. National federation of Indian Railwaymen
3. All-Indian Post and Dock Workers Federation
4. National Federation of Post and Telegraph
Workers
5. All-India Mine Workers’ Federation
6. Indian Federation of Working Journalists
Employers’ Association (Eos)
• Eos are formal groups of employers set up to defend,
represent or advise employers and strengthen their
position with respect to labour matters and defend the
economic interests of employers.
– The Associated Chamber of Commerce and Industry of India
(ASSOCHAM) : formed in 1920 under the Indian Companies
Act, 1913.
– Federation of Indian Chambers of Commerce and Industry
(FICCI): One of the apex organisations to which a large
number of chambers of commerce and industrial
associations are affiliated. It was established in 1927 and acts
as a coordinating agency for the commercial and industrial
interests of the various associations.
– All India Organisation of Employers (AIOE) : set up in 1932
and registered under the Indian Trade Unions Act with the
objective to promote and protect the interests of the
industry and represent the employers of India at the ILO.
Employers’ Association (Eos) contd
• Employer’s Federation of India (EFI): Set up in 1933 under the
Indian Companies Act and subsequently in 1963 registered under
the Indian Trade Unions Act, 1926. The objective of EFI is to
facilitate the selection of employer’s delegates for the meetings
and conferences of the ILO.
• Council of Indian Employers (CIE) : It was formed in 1956 to bring
the AIOE and EFI under one umbrella. The main objective of CIE is
to represent the interests of large scale industries in India. It is the
representative of Indian employers.
• Standing Conference of Public Enterprises (SCOPE): An
organisation of public sector undertakings it was set up in 1970
under the Societies Act. It assists the public sector to improve its
total performance and advises the government on matter relating
to the public sector.
• All India Manufacturers’ Organisation (AIMO): It was set up in
1941 to represent both the trade and labour interests in the
medium and small sectors.
LABOUR LEGISLATION IN INDIA
This is an important area which has a great impact on the industrial relation
system and has been instrumental in shaping the course of industrial
relations in India.
The objectives of the labour legislation are to
• Protect workers from exploitation
• Strengthen industrial relations
• Provide machinery for settling industrial disputes and welfare of workers
Labour legislation in India has a history of over 125 years. The laws regulate
not only the conditions of work of industrial establishments, but also
industrial relations, payment of wages, registration of trade unions, provide
social security measures for workers, define legal rights and obligations of
employees and employers and provides guidelines for their relationships.
In India all laws emanate from the Constitution. Under the Constitution,
labour is a concurrent i.e. both the Central and State governments can
enact labour legislation, with the clause that the State legislation cannot
enact the law which is repugnant to the Central law.
Profile of Labour Legislation in India
Standards and
Welfare and amenities
norms legislations legislations
Disputes processing and
rights of parties legislation
1. Factories Act
2. Shops and
Establishment Act
3. Mines Act
4. Plantation Labour
Act
5. Indian Merchants
Shipping Act
6. Minimum Wages
Act
7. Payment of Wages
Act
8. Indian Trade
Unions Act
Collective Matters: Central Acts
1. Industrial Disputes Act
2. Sales Promotion Employees Act
3. Payment of Bonus Act
State Acts
1. Bombay Industrial relations Act
2. Maharashtra Act for prevention of
unfair labour practices and
compulsory recognition of Trade
Unions
Individual Matters: Central Acts
Industrial Employees Standing
orders Act and Model Standing
Orders governing contract of
employment
1. Maternity Benefits Act
2. Employees State
Insurance Act
3.Workmen’s
Compensation Act
4.Employees Provident
Act
5.Gratuity Act
1.The Standards and norms legislations are concerned
with the health and safety of the worker at his workplace,
ensures payment for work done etc
2. The Welfare and amenities legislations looks into the
social security measures meant to protect workers
against risks of undue hardships and privation, provision
of medical care, accidental compensation, compensation
during illness, retirement benefits etc
3. The Disputes processing and rights of parties
Legislation provides for settlement of disputes by
negotiations, conciliation, mediation, voluntary arbitration
and compulsory arbitration.
First Five Year Plan (1951 - 1956) - emphasised on the importance of setting up a
tripartite body, providing for the conciliation machinery for healthy industrial relations.
Second Five Year Plan (1956-1961) – Stressed on Code of Discipline, on internal
settlement between the employers and the workers and their organisations, necessity
of building a strong trade union movement, setting up of Standing Joint Consultative
Machinery at all levels, towards promotion of industrial relations in the country.
Third Five Year Plan (1961-1966) - The development of Code of Discipline and
extension of the Joint management committee to new industries and units.
Fourth Five Year Plan (1969-1974) - protective legislative measures - Payment of
Bonus Act, 1965, Shops and Commercial Establishments Act and Labour Welfare Funds
Acts in States and extension of activities of Employees’ State Insurance Corporation,
promotion of collective bargaining, raising of productivity through labourmanagement cooperation and growth of a healthy trade union movement.
Fifth Five Year Plan (1974-1979) - improvements in various aspects like Increasing level
of worker participation in certain spheres of decision making; Setting up of shop
councils and similar bodies; Improvement in communication systems; Introducing of
productivity-linked incentive scheme bearing good results.
Sixth Five Year Plan (1980-1985) - also referred to as the Janata Government Plan, has
reiterated the importance of tripartite consultations, growth of trade unions on
healthy lines, empowers the Government to punish any person who participates or
instigates a strike which is deemed illegal under ESMA.
Seventh Five-Year (1985-1989) - The primary aim of the five year plan was to
upgrade the industrial sector and enable India to establish itself as one of the
developed countries of the world. The objective of this plan was to generate more
scope of employment for the people of India, to produce more in terms of food which
would lead to an overall increase in productivity.
8th five year plan – (1992 - 1997) The basic objective of this plan was to modernize
industrial sector, focus on technical development. During this period India received a
coveted opportunity to become a member of the World Trade Organization.
9th Five Year Plan (1997-2002) - The main objective of this Plan was - Industrialization
at a rapid pace, · Reduction in poverty level, complete employment for all countrymen,
price stabilization, promotion of social events like benefits for special social groups,
female empowerment, etc.
The 10th Five Year Plan (2002-07) - The main objective of this Plan is to make
provision for useful and lucrative employments, decrease in gender discriminations in
the spheres of wage rate and literacy, setting up of a state-of-the-art infrastructure,
introduction of reforms and capacity building in Indian industrial sector
11th five year plan: ( 2007 to 2012) - Owing to India's five year plans, great
advancement has been made with regard to India's national income. Since 1951 ( 1st
five year plan was presented) India has come a long way. India has taken giant strides
and today it is considered as one of the emerging powers. India is currently following
the 11th five year plan. The tenure of the 11th five year plan is from 2007 to 2012.